LGPS and a PRU AVC

mae

Hi

I have had a local government pension for 16 years. I have recently opened a Pru AVC alongside my LGPS which I am just paying £200 per month into.

When I set up the AVC (3 months ago) it asked me what age I want to retire (I do not know so I put 60) and it asked me what investment type I wanted (I literally guessed as its a foreign language to me). I can change these options in my online portal. My question is where can I go for advice on getting the two things as 'right' as possible for my circumstances? 

I am not young in terms of pension planning ( age 52) so I am guessing that will also play a part in decisions.

I am guessing PRU are not allowed to advise me so I feel a little stuck who to get guidance from as I also suspect its too small an ask for paying for a Financial Advisor?

Brie

PensionWise might be able to help - they discuss the terms and what the different options might mean for you rather than give actual advice so it's quite informative.  

xylophone

https://www.mandg.com/pru/workplace-pensions/employees/public-sector-avc-schemes/local-gov/avcs

The options as above?  Have you watched the video and read the Funds Guide?

AlanP_2

Unless you have chosen a lifestyle option where the proportion of bonds to equities is tweaked as chosen retirement date approaches the date you choose is immaterial in practice.

As for the actual investments, as you say, an IFA is unlikely to get involved in this.

What are your broad intentions as regards the AVC? I guess it is to take it as a TFLS when you take your main LGPS pension.

Then what? You will have an amount of cash, is it for something particular e.g. pay off mortgage, special holiday etc?

Will it be kept as cash and spent over first few years of retirement?

Will it be used to top up income over the rest of your retirement? If you were, then to beat inflation you would need to reinvest some of it in equities and bonds. This effectively means you need to try and choose investments now that are suitable for 30 to 40 years not just the next 10 to 15 leading up to retirement.

Your investment choice needs to be aligned with your goals.

Take a bit of time to think things through in the context of your overall financial situation and goals across the family unit e.g. other half if applicable as a joint plan has more chance of success.

mae

AlanP_2 said:

Unless you have chosen a lifestyle option where the proportion of bonds to equities is tweaked as chosen retirement date approaches the date you choose is immaterial in practice.

As for the actual investments, as you say, an IFA is unlikely to get involved in this.

What are your broad intentions as regards the AVC? I guess it is to take it as a TFLS when you take your main LGPS pension.

Then what? You will have an amount of cash, is it for something particular e.g. pay off mortgage, special holiday etc?

Will it be kept as cash and spent over first few years of retirement?

Will it be used to top up income over the rest of your retirement? If you were, then to beat inflation you would need to reinvest some of it in equities and bonds. This effectively means you need to try and choose investments now that are suitable for 30 to 40 years not just the next 10 to 15 leading up to retirement.

Your investment choice needs to be aligned with your goals.

Take a bit of time to think things through in the context of your overall financial situation and goals across the family unit e.g. other half if applicable as a joint plan has more chance of success.

I have chosen this:

15 year lifestyle targeting 100% cash at retirement

Absolutely no idea what this is and I can change it but no idea what to. I have watched the videos and read the information and I am still non the wiser what to choose.

And I will use it as you say as a tax free lump sum towards my mortgage or a holiday or something if the mortgage is paid at that point.

mae

I have contacted Pru but they said they can't aedvise which I understand but equally this means I don't know where to get some guidance from as its such a small but equally important decision.

mae

xylophone said:

https://www.mandg.com/pru/workplace-pensions/employees/public-sector-avc-schemes/local-gov/avcs

The options as above?  Have you watched the video and read the Funds Guide?

Thanks I have watched them and read all the info but I still don't know which option to choose.

mae

Brie said:

PensionWise might be able to help - they discuss the terms and what the different options might mean for you rather than give actual advice so it's quite informative.  

Thank you I will try and make an appointment with them and see if they can give me some guidance on a decision.

QrizB

mae said:

I have chosen this:

15 year lifestyle targeting 100% cash at retirement

Absolutely no idea what this is and I can change it but no idea what to. I

With that lifestyle plan, on the day that you've told the pension company that you plan to retire you will be fully divested from the markets and your pension will all be in cash.

That type of lifestyle plan is usually aimed at people who plan to take all their pension at once and buy a yacht / sportscar / villa in Cyprus.

Is this how you plan to use your pension? If it is, great. If it isn't, what are you expecting to do with your pension funds when you stop woking?

mae

QrizB said:

mae said:

I have chosen this:

15 year lifestyle targeting 100% cash at retirement

Absolutely no idea what this is and I can change it but no idea what to. I

With that lifestyle plan, on the day that you've told the pension company that you plan to retire you will be fully divested from the markets and your pension will all be in cash.

That type of lifestyle plan is usually aimed at people who plan to take all their pension at once and buy a yacht / sportscar / villa in Cyprus.

Is this how you plan to use your pension? If it is, great. If it isn't, what are you expecting to do with your pension funds when you stop woking?

I intend to just take it as a tax free lump sum (won't be a large pot obviously at this stage!) alongside my local government pension.

r6mile

In which case that seems a sensible choice. The LGPS AVC scheme is very good in that it is linked to you main scheme, so the AVC can all be taken tax-free as long as it's taken at the same time as the main pension. If you want to take it all as cash then that seems an appropriate choice.